Broad Market Analysis – April 20, 2018

Hi team. This is A.J. Brown with Trading Trainer on the evening of Friday, April 20, with your Trading Trainer weekend edition of your daily insights. What we are going to do here is take a look at the broad market by taking a look at representative indexes of our watch list, namely the Dow Jones Industrial Average, the NASDAQ Composite Index, and the S&P 500 Index. We are also going to look at the New York Stock Exchange Composite Index and the VIX Volatility Index. Because it is the weekend, we’re going to take a look at both daily and weekly charts.

But before looking at any charts, we’re actually going to log into the Trading Trainer ‘Learning Community’ web portal by going to login.tradingtrainer.com. Of course, once we’ve logged into the ‘Learning Community’ web portal, I’m going to direct you right to today’s ‘Daily Insights’ tab and further to the ‘Recommendations’ subtab.

Team, take a look at the recommendations we have for Monday, April 23’s, trading session. Slight changes in these recommendations could have a major impact on your trading. You are also going to find here a link to our audio commentary. This is the audio where I take you by the hand through today’s ‘Daily Insights’ tab and its subtabs. Go ahead and click on that link. An audio is going to start playing automagically in the background, in another browser tab, or another browser window, depending on how you have your browser configured. Go ahead and follow with that audio as we go through the ‘Daily Insights’ tab and its subtabs. It’ll make sure you pick up all the highlights. You can always go back and do a deeper dive later. Team, please pay special close attention to the opening and closing comments of that audio commentary. In the meantime, for this particular ‘Broad Market Analysis’ of these ‘Charts of Interest’ video series, let’s click on the ‘Daily Insights’ tab and the ‘Index Stats’ subtab.

Moving on to our secondary indexes, our 100 best stocks out there, shown by the S&P 100, fell 0.97% today and gained 0.25% for this past week. Our mid-caps, shown by the S&P 400 index, fell 0.69% today and gained 0.88% for this past week. Our small caps, shown by the S&P 600 and the Russell 2000, two different perspectives on small caps, fell 0.63% and 0.62% respectively for today and gained 0.94% and 0.94% respectively for this past week. Our New York Stock Exchange Composite Index fell 0.51% today and gained 0.49% for this past week. Our VIX Volatility Index gained 5.76% today and fell 3.04% for this past week to close at $16.88 per share. Our gold ETF fell 0.76% today and fell 0.64% for this past week. Our oil ETF fell 0.15% today but gained 1.48% for this past week.

With respect to the heavy volume, please remember today was options expiration day for the month of April.

Team, let’s take a look at our ‘Daily Insights’ tab and our ‘Economic Calendar’ subtab. First thing I’d like you to do is read today’s ‘Market Reflections’ summary, then fast forward to Monday, April 23, and read the ‘Market Focus’ pointers. On Monday, April 23, we also have our once a week ‘International Perspective’ and ‘Simply Economics’ reports. These two reports are important to read this weekend. Please go through them thoroughly as a foundation for the upcoming week of trading. These reports summarize very well what’s happened the previous week and what is scheduled to come.

Coming back to today, Friday, April 20, it was a very quiet trading day. Very little economic news was released. Looking to the upcoming week, Monday, we have our PMI Composite Flash as well as our Existing Home Sales. Tuesday, we have more home sales data. Wednesday is somewhat quiet. Thursday and Friday are good economic news days. Most of all our economic news during this upcoming week is completed no later than 10:00 a.m. Eastern time.

Team, let’s move on to our ‘Trading Tools’ tab and our ‘Watch Lists’ subtab. No tickers were identified by our ‘Covered Call Writing’ or ‘Options Trading’ candidate filters. Let’s move on to our ‘Trading Tools’ tab and our ‘Daily Picks’ subtab. Here you’ll find the Trading Trainer ‘Daily Picks Report Generation’ tool. We’re going to take a look at volume and trends of our indexes in order to do a deep dive.

Volume, especially on the Dow Jones Industrial Average, was heavy compared to yesterday. The NASDAQ Composite Index, slightly lower. Compared to the 50-day volume simple moving average, about the same. On the NASDAQ, lower. The 200-day, about the same. The oscillator shows that we haven’t had strong volume over the past days. Our short-duration trends are bullish. Our long-duration trends, for the most part, are neutral. We see a little bit of bearish in the long duration on the Dow Jones Industrial Average and the S&P 100.

Taking a look at our template algorithm filters. These mathematically go through whatever raw data they are presented with, looking for patterns in the numbers. We’re going to present these templates with the raw data of our index tickets. That’s going to give us an idea of what the broad market personality is doing, as well as what to look for in our watch lists.

Our trend continuation templates are coming up neutral, mainly because we don’t have enough long-term trend to get a trend continuation pattern. Moving to our short-term trend template and our trend reversal template, our trend reversal template is showing bullishness. Our short-term trend action template has stalled out on us. This could mean that we are in a state of range contraction. We’re either testing the current bull trend or we may be seeing yet another reversal back down. Our pattern alteration template is showing tighter Bollinger Bands with the Bollinger Band Width Index being fours and fives. The Candlestick Bar Count is creeping up near 20, telling us that we are sideways channeling and perhaps entering a phase of consolidation.

Team, let’s go to our ‘Trading Tools’ tab and our ‘Charting’ subtab. We’ll start with a ‘Quick Review’ template. This is a six-month, daily chart with a linear scale and open high-low close bars. On a separate pane, there’s volume and volume average. To that, I’d like to add the 30, 50, and 200-day simple moving averages. These lagging indicators help me determine a trend. I have those simple moving averages added to the ‘Quick Review’ template here in a user-defined template in my personal profile. I’m going to apply that user-defined template to the indexes, specifically starting out with the Dow Jones Industrial Average.

To begin with, I’m going to go to a weekly, two-year chart. This week, we can see a doji bar, meaning price pretty much closed where it opened, and we maybe see the formation of a ‘Lincoln’s Hat’ bar pattern. That means that the intra-week price went high, but came right back down. Volume definitely is influenced by option expiration today, but for the week, let’s see, our polarity, we have lower lows, we have lower highs. Our polarity is bearish. Perhaps I see some consolidation. Perhaps I see some trending. Very hard to discern. Let’s switch to a six-month, daily chart. Here we can see lower highs and lower lows. Heavier volume today on options expiration. 200 is up, 30 is flat, 50 is flat. Our seven-day simple moving average, not quite crossed up back above the 50 yet. Price has a Z bar today. Let’s take a look at what that looks like in the intraday chart. We’ll go to a five-minute chart. Today, although a little on the choppy side, we see a pretty definite selloff. Back to our daily chart. Let’s take some notes. We closed at $24,462.94. We’ll switch our weekly polarity to bearish. Our daily polarity is bearish. Flat, flat, up for the 200-day. Flat for the 30-day. Flat for the 50-day. Our 50 is above the 200, but our 30 does remain below the 50. Our seven still remains below the 50, but our seven is above the 30. Our trading bias is neutral.

Moving to the NASDAQ Composite Index. Switching to our weekly, two-year chart. Again, a doji week. Almost a Lincoln’s hat week. Higher highs and higher lows. That means we have a bullish weekly polarity. This week, a stall. Let’s switch to our six-month, daily chart. Our seven-day looks to close above our 30 and our 50. Our 30 actually dipped down below the 50 today. The seven is almost heading back up. Volume shows that today’s selloff had some impact, although the volume could be influenced by options expiration day. Our 200 is up, our 50 is up, but our 30 is down. Let’s take a look at our five-minute chart. Clearly, a selloff day. A choppy selloff day, but a selloff day. Back to our daily chart. We closed at $7,146.13. Again, our seven has not made it above the 30 or the 50 yet. The 30 just closed down below the 50. The 50 is above the 200. The 30 is down. The 50 is up. The 200 is up. Our weekly polarity is bullish. For our daily polarity, we have a lower low and a lower high. We just went from testing bear to full-on bearish. It’s a very confusing chart. Some aspects are saying we’re on to a bullish trend, other aspects are saying we’re onto a bearish trend. We’ll keep a neutral trading bias.

Finally, the S&P 500 index, starting with a weekly, two-year chart. Our 30, our 50, and our 200 are pointing up. This was a ‘Lincoln’s Hat’, doji week. Volume was ticked up. Lower highs. Interestingly enough, higher lows. That means we are testing bull. Let’s switch to a six-month, daily chart. Our 30 is down, our 50 is flat, and our 200 is up. Our 30 is below the 50. Our 50 is above the 200. Our seven has crossed above the 30, but it needs to cross yet above the 50. It looks like it’s on its way. Let’s take a look at our five-minute intraday chart. Clearly, a downtrend. Again, a choppy one at that, but a downtrend. Back to our daily chart, taking some notes. Closing at $2,670.14. We’ve taken our notes here. We’ll keep ourselves with a neutral trading bias.

The New York Stock Exchange Composite Index, starting with a weekly, two-year chart, matches with the big three indexes. A stall week, ‘Lincoln’s Hat’, meaning we went up and came right back down to where we opened. Switching to a six-month, daily chart, our seven-day has crossed above both the 30 and the 50. The 30 and the 50 are flat. The 200 is neutral. But with the latest dip down and a polarity being bearish, we’ll keep our neutral trading bias.

Moving to the VIX Volatility Index, starting with a weekly, two-year chart, with a 40-week simple moving average, we can see the implied volatility had an upside-down ‘Lincoln’s Hat’. It went pretty low midweek, but it wound up closing at the end of today, right back where it started. This makes good for selling premium. Selling option premium is one of those strategies that is just perfectly timed for right now. Switching to a six-month, daily chart with a 200-day simple moving average, the implied volatility has been creeping back up. Taking some notes, today our volatility increased by 5.76% to close at $16.88 per share.

Our overall trading bias remains neutral.

Our broad market personality is sideways channeling, testing the bullish inter-channel trend, preparing for April options expiration. That happened today, so we’ll take that out of our notes. Just sideways channeling, testing the bullish inter-channel trend.

The market is responding to the following, including but not limited to, transient external stochastic shocks, the US fiscal policy, the US Federal Reserve monetary policy, monetary policies of China, Europe, and Japan, the price of oil, US economic news, including employment, housing, manufacturing, and retail, and, of course, the market news, including mergers and acquisitions, initial public offerings, public companies going private, and earnings.

Team, that’s all I’ve got for you this weekend. I hope you have a good upcoming week of trading and investing. Please take care.

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